Jan. 31 (UPI) -- For the first time, the United Arab Emirates is introducing a corporate tax rate -- a shift for the Middle East country that's known for attracting some of the world's largest corporations because of its long-held exempt status.
The UAE's finance ministry said Monday that it's imposing a 9% tax rate on companies with taxable income exceeding $375,000 or more. The tax will take effect on June 1, 2023.
"The UAE corporate tax regime has been designed to incorporate best practices globally and minimize the compliance burden for UAE businesses," the ministry said in a statement.
"Given the position of the UAE as a global financial center and an international business hub, the UAE corporate tax regime will support investment and headquarters activities and ensure the free flow of capital, trade, financing and services."
Last October, the Group of 20 endorsed a global minimum tax rate of 15% starting in 2023 to prevent large companies from shifting profits to other countries to avoid paying taxes.
Monday, the ministry said the 9% rate is based on the Organization for Economic Co-operation and Development's Base Erosion and Profit Shifting project.
The UAE tax plan will not subject taxes to an individual's income from employment, real estate, equity investments or other personal income unrelated to a trade or business. The tax also will not apply to foreign investors who don't conduct business in the UAE.
